Our View: Define options

The City Council's recent handling of One Steamboat Place underscores the need for the council to decide whether it wants to continue offering the payment-in-lieu option in its inclusionary zoning ordinance for affordable housing.

If it does embrace payment in lieu, then it must better define when and how such payments will be applied.

Last week, the City Council approved One Steamboat Place but only on the condition that developer Timbers Co. revise its affordable housing plan. Timbers Co. had offered a payment of $418,000 "in lieu" of meeting the inclusionary zoning ordinance's requirement that 15 percent of the units in any new development be deed-restricted, affordable housing. The council met with Timbers Co. on Tuesday night to discuss the issue.

In coming up with its initial offer, Timbers Co. followed what it thought were the rules set forth in the ordinance. On one hand, the ordinance seems to allow the developer to pay a fee in exchange for not building the required affordable housing on site.

For example, there will be 85 units in One Steamboat Place. That means Timbers would have to build 12.75 affordable units on site, according to the zoning ordinance. But the ordinance also gives developers the option of paying a fee. According to the ordinance, the fee should be equal to "the difference between the market rate cost per unit and the initial purchase price of the affordable units." City staff has defined that difference as slightly less than $25,000 per unit, though that number is not in the ordinance itself.

The fee also requires the developer to pay the fee based on a 25-percent increase in affordable units above the 15 percent required on site. In One Steamboat's case, that total is 15 units. The ordinance also requires an administrative fee.

Thus, the One Steamboat Place developers took the city's own ordinance and the city's own formula to come up with a payment of $418,000.

The ordinance also says "Payment in lieu fees may be allowed, at the sole discretion of the City Council, if the following criterion is met: Disturbances to the community housing units from short-term vacation accommodations and other short-term rentals cannot be feasibly mitigated."

That indicates that payment in lieu is an option only if the City Council decides to allow it.

We have questions about payments-in-lieu. Specifically, we need a clearer understanding of how the city will leverage such payments to create more affordable housing than would be built on site. We understand the money could be useful in acquiring land for future affordable housing projects, but we're not sure acquiring land alone will result in a net gain in affordable units.

The City Council appears divided about whether payments in lieu should even be offered. The council must decide whether it is going to embrace such payments. If so, then it must clarify specifically when such options are available and how those payments will be made. It isn't fair for developers such as Timbers Co. to prepare plans on such vague and shifting landscape.